Vulcan Energy’s Lionheart Build Accelerates as Siemens Deal and Tax Break Bolster the Case

Vulcan Energy burns €76M in Q1 on Lionheart lithium plant, with €1.2B loan expected in Q2. Lithium prices rise 50% but shares lag 41% below highs.

The lithium developer’s flagship project in Germany’s Upper Rhine Valley is entering its most capital-intensive phase yet, with €76 million drained from the balance sheet in the first quarter alone. That burn rate has trimmed cash reserves to roughly €364 million, down from over €500 million at the start of the year, as the company funnels money into plant components, land acquisitions, and milestone payments to contractors.

The financial strain comes at a pivotal moment. Management expects to formally close the €1.2 billion bank loan package for Lionheart during the second quarter, a milestone that would unlock the bulk of the project’s funding. State subsidies are expected to supplement that debt facility, though the exact composition of the total financing remains under wraps until the deal is signed.

On the ground, activity is accelerating. A sixth geothermal well is now being drilled in the Upper Rhine Valley, and construction of the Lionheart lithium plant officially kicked off on April 24. At the Landau site, a new drilling pad is taking shape on a ten-hectare plot, with the rig scheduled to deploy in the second half of the year. Further work is planned at the Schleidberg and Trappelberg locations.

The deepening partnership with construction giant Hochtief is also becoming more visible. Roberto Gallardo, the Essen-based group’s head of strategy, joined Vulcan’s supervisory board in April. Hochtief serves as Lionheart’s main contractor and remains a significant shareholder, giving it a direct stake in the project’s timely delivery.

A €40 million supply agreement with Siemens for specialised equipment has been signed, adding further industrial heft to the build-out. That deal complements a five-year royalty exemption for lithium extraction that German authorities confirmed in mid-April, a fiscal boost that improves the project’s economics without adding to the capital burden.

Lithium Price Tailwind, But the Share Price Lags

The macro backdrop is turning more favourable. Battery-grade lithium carbonate has climbed roughly 50 percent since the start of the year to around $25,600 per tonne, while lithium hydroxide trades at about $20,700. BMI, a unit of Fitch Solutions, has revised its annual forecasts higher, now pencilling in average prices of $17,000 for carbonate and $16,700 for hydroxide.

Two structural forces are driving the rebound: sustained battery demand for electric vehicles and a rapid build-out of energy storage for data centres, where capacity is expected to grow 80 percent over the next five years. Geopolitical tensions and trade restrictions are squeezing supply, a dynamic the World Bank recently highlighted as a key vulnerability in lithium markets. That backdrop makes European projects like Lionheart strategically more valuable.

Yet Vulcan’s stock has not kept pace. The shares closed at €2.33 in German trading, roughly 41 percent below the 52-week high of €3.98 hit last October. Year-to-date, the stock is down about 13 percent, significantly underperforming the lithium price. The annualised volatility of nearly 79 percent underscores the market’s unease during this construction-heavy phase.

There are glimmers of recovery: the stock has climbed nearly 30 percent from its 2026 low of €1.80, and the relative strength index sits at 58, suggesting the selling pressure has eased. The market capitalisation stands at roughly $1.3 billion.

Internal Signals Raise Questions

A detail from the first-quarter report has caught the attention of analysts. CEO Cris Moreno and CFO Felicity Gooding allowed more than 400,000 performance-linked stock options to lapse at the end of March, an indication that internal milestones were missed. While the company has not commented on the specific targets, the forfeiture suggests some operational benchmarks slipped during the quarter.

On the revenue side, Vulcan has locked in downside protection. Roughly 72 percent of future production is covered by floor prices or fixed-price agreements with automakers including Stellantis, insulating the company from the recent volatility in lithium spot markets.

What’s Next

The next major test comes on May 28, when management meets shareholders at the annual general meeting in Perth. The board will need to convince investors that the construction budget remains on track and that the €1.2 billion loan package will close as planned. The 2028 production target hinges on that financing falling into place this quarter.

Vulcan is also making its case to institutional investors at the Precious Metals & Critical Minerals Virtual Investor Conference, which began May 5. Whether the operational momentum—construction progress, the Siemens contract, the tax exemption—translates into share price support will become clearer in the weeks ahead.